Session 12 Marketing Management Prof. Natalie Mizik

[Pages:33]New Products

Session 12

Marketing Management

Prof. Natalie Mizik

Agenda

What is a New Product?

Why do firms introduce new products?

Why do some good product ideas go bad?

What factors affect customers' adoption of

new products?

Creativity in NPD

2

Prof. Natalie Mizik ? 2010 MIT 15.810

New to the World?

Total

Total Fresh Stripe

2 in 1 toothpaste & mouthwash

Sparkling White

Sensation Whitening

Sensitive Maximum Strength

Tartar Control

Tartar Control Plus Whitening

Baking Soda & Peroxide Whitening

Tartar Control with Baking Soda & Peroxide

Cavity Protection

Star Wars

Barbie toothpaste

Looney Tunes toothpaste

My First Colgate Toothpaste with Barney

Only about 5 - 10% of new products are truly new

3

Prof. Natalie Mizik ? 2010 MIT 15.810

Types of New Products

Newness

L

Not Very New

M

Moderately New

MA R K E T

L

M

H

Cost Reductions

11%

Repositionings 7%

Product Line Extensions

26%

H

Very New

New Product Lines 20%

New to the World 10%

F I R M

4

Prof. Natalie Mizik ? 2010 MIT 15.810

CUSTOMER

Why Do Firms Introduce New Products?

Support additional usage Better meet needs of slightly different sub-segments

through differentiation Address needs of potential emerging segments Encourage variety seeking Enhance sales of current products

Counter encroachment by alternative products

Control shelf space

COMPETITION

Alter brand image

Replacing and improving mature products is a key

success factor for a firm COMPANY

5

Prof. Natalie Mizik ? 2010 MIT 15.810

The low-carb trend

Number of low-carb new products

% of Americans on Atkins/South Beach diet

4000 3000 2000 1000

1972

9 Aspen Edge by Coors 8

(March 2004) 7

6

5

4

3

Michelob Ultra

2

(Sept. 2002)

1

2000 2001 2002 2003 2004 2005

Image by MIT OpenCourseWare.

Prof. Natalie Mizik ? 2010 MIT 15.810

Enhance Sales of Current Products

Asymmetric Dominance Effect

Attribute 1

competitor A

decoy

B C

target

Attribute 2

Adding a dominated alternative can increase the probability of choosing the dominating alternative. (Huber, Payne and Puto 1982)

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Prof. Natalie Mizik ? 2010 MIT 15.810

At the Movies...

Compromise Effect The share of a product is enhanced when it is the

intermediate option in the choice set and is diminished when it is an extreme option. (Simonson 1989)

Prof. Natalie Mizik ? 2010 MIT 15.810

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